The Earnings Bell Curve

Previously, we talked a little about the demographic wave – and how our country currently has small generations (like the Silent Generation and Generation X) that alternate with much larger generations (such as the Baby Boomers and Generation Y).  Knowing where your members fall in the wave and understanding the pool of prospective members within each section of the wave can help you shape your marketing strategy and your expectations for membership numbers across each group.


THE OUTCOME OF INCOME
Another important thing to consider is the income curve.  Average income and average expenditures tend to follow a bell curve, with both peaking at around 50 years of age. Credit union members tend to be most profitable when they are in the top portion of the bell curve – using a variety of products and services, particularly loan products.  The average age of a credit union member is 47 years old, according to CUNA.  That means most credit union members are likely Baby Boomers, who are somewhere near the top of the bell curve. The catch, then, is making sure you keep a steady stream of members climbing the bell curve to make up for other members as they age out of their prime profitability. 


DANGER: CURVES AHEAD! 
Now think about this bell curve in terms of generations.  According to a December 1, 2010 article in Credit Union Times, over 40% of credit union members are Baby Boomers between the ages of 46 and 64 years old.*  The group currently climbing the income/expenditure curve is Generation X, which we know has about 9 million fewer people than the Baby Boomer Generation.  This means that in order to make up for the smaller size of Generation X and maintain your current level of profitability, you need to extend your efforts to cross-sell products to the Boomers and start heavily recruiting the next big generation: Generation Y.


CU Times, 12/1/2010, Marvin Umholtz: “Nonconformist Boomers Are Unconventional Members.”